The Prathers have horrible income tax trouble. Economically, they did not make in their pump business a lot of money in 1954, but the commissioner and the Director of Internal Revenue have bunched into 1954 what was really the fruits of an individual business enterprise which began in 1942 and continued into 1955.

Apparently during the years of the enterprise the Prathers’ net worth was going steadily, slowly and surely upward. But they were showing on their returns comparatively little taxable income from their business. This they accomplished from 1942 to 1953 by reporting on the cash receipts and disbursements method. No suggestion is made of any immorality or wrongfulness in so doing. In 1953, taxpayers switched their accounting from a cash basis to an accrual basis, but on their 1953 return they made adjustments to show their income on the old cash basis.

On January 1, 1954, the Prathers on the new accrual basis showed net assets of $303,397.63 and liabilities to others of $100,991.90. For 1954, the return showed net taxable income on an accrual basis of $9,410.52. The director has added over $200,000 of net taxable income to the 1954 return and asserts a deficiency of about $160,000 in taxes. We do not have to go outside of the record to surmise that the director’s (now the commissioner’s) position, if upheld, about ruins the Prathers and takes the fruits of a business they built up for over 13 years. The tax court has upheld the commissioner.

We assume that the business started when inventory and receivables were small factors, or that at the outset it may have been that capital represented in the inventory and receivables was offset by borrowed capital. Anyway, they went on and on reporting on a cash basis, which obviously did not reflect their financial betterment somewhere between 1942 and 1953. For some of the returns for pre-1954 years, there were discussions with field agents about a change from cash to accrual reporting — but nothing happened. Neither the taxpayers nor the tax gatherer insisted on a change, and it is not clear that either wanted it.

In 1954 a new Internal Revenue Code was adopted with the following provision:

In pertinent part, Section 446 (and its predecessor) has provided for a long time as follows:

If taxpayer could successfully change his accounting and reporting method for the year 1954, Section 481, on August 16, 1954, gave him an escape to avoid the bunching of income in the year in which he made his shift of accounting basis. But Section 446(b) at least presented a problem — approval of change of method by the “Secretary or his delegate.”

Promptly after the August 16, 1954, enactment the commissioner started one of his most successful “sit downs” in the history of American tax law. Not approving of Section 481 as enacted, he declined consistently to approve under 446(b) accounting method changes, until after the Congress on September 2, 1958, adopted the Technical Amendments Act, Section 29 of which amended Section 481(a) (2) to read as follows:

With this change, the taxpayers, who already had their 1954 tax case in the tax court, were in real trouble. While the parties disagree as to the effect of non-approval of the change in accounting and repoxhiing, both would agree that the commissioner has never expressly approved the change.

Taxpayer’s first point is that Section 481(a) (2) as amended in 1958, “unless the adjustment is attributable to a change in the method of accounting initiated by the taxpayer,” is unconstitutional. This claim was not pleaded before the tax court. It could not have beeix pleaded, of course, before enactment. But there was plenty of time after enactment and before decision to x’aise the point. The tax court apparently received extensive briefs on the constitutionality and heard arguments thereon. In announcing the decision, the tax coui*t held the issue not before it, but said, if it were, the court would decide in favor of the commissioner.

While we agree that cases should be kept to the basic pleadings, yet the tax court let the parties fight out before it the issue. We thus conclude the issue was before it for decision.

After study of the question, we hold the statute constitutional. Equitably the terrible penalty of the income bunching here leaves one disturbed, but we cannot yet find unconstitutionality. Of course, the possibilities of the 1954 Section 481, permitting a taxpayer to escape taxes that another just like him had paid, did not present an attractive picture. Thus, the commissioner was able to get the law changed four years later.

There seems little doubt that the 1958 amendments to Section 481 searching back to December 31,1953, were intended to reach taxpayers who had done just as the Prathers had done. In our judgment, constitutionality was saved by two provisions inserted into the section giving a ten-year carry forward (Subsection (b) (4) of Section 481 as amended) and an option under Subsection (e) to return to (or recast) the old method of accounting at the election of the taxpayer. The election was to be made within six months. The last day to make the election was March 2, 1959. (There was some delay after enactment on September 2, 1958, before promulgation of the regulation telling taxpayers how to do it, but still there was time.)

Taxpayers rely greatly on the change of position they took in 1955. In that year they put their pump business into a family corporation. Taxpayers having ceased to do business as individuals, the ten-year foi*ward was of inconsequential value. But still they didn’t elect to return to the cash basis which had obtained through 1954. The reason given is that such a course would have inflicted grave tax consequences on their separate entity, the corporation. What those consequences would be, we are not told. But we. think we know. Anyway, the problems of another entity on its taxes just can’t be borrowed hei*e to knock out the constitutionality of the 1958 changes in Section 481 of the act. We do not believe in their able brief that taxpayers ever quite meet the failure to elect to go back. Albeit, we say they have done as well as they can. It is not asserted that tax payers were ignorant of the act, but if so that would not be an excuse.

We cannot say the period for election was unduly short. We assume men have lost fortunes for failure to answer summonses within 20, 30 or 60 days.

One must be sympathetic with the taxpayers here, but even on a “fireside equity” basis it can be said for the government that late in 1954 and early in 1955 it was common knowledge that the commissioner was fighting Section 481 as enacted in 1954 with everything at his command. His announced policy of not approving any changes in accounting methods may have been what prompted taxpayers to “go it alone” and unilaterally change their accounting and reporting basis. We cannot see that the commissioner’s audit of the 1954 return committed the Congress or bound it not to amend the section.

A four-year search back is a long time, but cushioned as we believe it was with two escapes, one of which was clearly open to the taxpayers, we cannot say that we find unconstitutionality — in view of the very rare decisions of the Supreme Court which have proscribed retroactivity. We have to work within their pronouncements.

Taxpayers assert if the 1958 amendment to Section 481 is constitutional, then they are entitled to carry back for two years behind 1954.

This point one must dig out of Section 481, after the 1959 amendments, in the following parts which are supposed to be pertinent:

Somehow or other there must be a way of writing a tax statute that is not so complex and does not involve subdivision under subdivision under subdivision under subdivision, cross-cutting and counter-marching.

But pursuant to 481(b) (6) the Treasury promulgated the regulation shown in the margin.

Also, taxpayers say they were not required to make the election because they were already in the tax court where, by their presence, the statute of limitations had ceased to run, that the election procedure was provided simply to get waivers of the statute of limitations from taxpayers. No waivers from them were needed and so no waiver and election had to be filed with the director, so the reason runs. But the regulation did require the filing with the director. Even though it might be argued that once one’s case is in the tax court it might be better to have a statute or regulation provide that an election could be filed in the tax court, still the regulation was within lawful bounds of the statute. What the taxpayers at the time thought of the two-year carry back is shown on June 23, 1961, when they attempted in a letter to the commissioner to secure allocation under 481(c) is shown by the following extract of the letter:

We find no evidence that the taxpayers really ever “elected” the two-year carry back until they reached this court, and then they did it in the alternative. If it be silly to require the taxpayer to file the election with the director, nonetheless it was a silly condition that could have been met.

Overall, the trouble with taxpayers’ case is that they had an escape that would have saved them from ruin, the option to jump back to their old cash basis accounting. There was a time limit. They let it go by. Further, it just can’t be accepted as a reason to declare a statute unconstitutional the circumstances that they would not have transferred their business to a corporation had they known about statutory changes to come.

Here, as we have indicated above, the law takes a terrible toll. We have been unable to convince ourselves that we can avoid it.

The decision of the tax court is affirmed.

. Perhaps the commissioner was not inclined prior to 1954 to require a change in accounting method because on changes made at his direction the courts were not inclined to let him bunch income in the year of change. See Commissioner of Internal Revenue v. Mnookin’s Estate, 8 Cir., 184 F.2d 89 , and Welp v. United States, 8 Cir., 201 F.2d 128 . On the other hand, pre-1954, the majority of decisions, we believe, had held that if the taxpayer initiated the change, income could be bunched in the year of change. See e. g., Advance Truck Co. v. Commissioner, 9 Cir., 262 F.2d 388 . Prior to 1954 the effects of changing accounting methods seems to have been left to administrative and judicial decision. . See Cohan v. Commissioner, 2 Cir., 39 F.2d 540 , and cases there cited; Nicol v. Ames, 173 U.S. 509 , 19 S.Ct. 522 , 43 L.Ed. 786 ; Welch v. Henry, 305 U.S. 134 , 59 S.Ct. 121 , 83 L.Ed. 87 . The court has carefully considered Nichols v. Coolidge, 274 U.S. 531 , 47 S.Ct. 710 , 71 L.Ed. 1184 ; Blodgett v. Holden, 275 U.S. 142 , 48 S.Ct. 105 , 72 L.Ed. 206 ; and Untermeyer v. Anderson, 276 U.S. 440 , 48 S.Ct. 353 , 72 L.Ed. 645 . These cases involved retroactivity of taxation of single event occurrences, not retroactive income tax where the concept is “flow” and where the taxpayers had made unauthorized changes in accounting methods. Here the 1954 act gave taxpayers no right to unilaterally make a change and the 1958 act permitted them to have what they had legally on December 31, 1953, a right to the cash accounting basis. The difference is marked. To tax a single event (over which the taxpayer had no control) after it happened is shocking. . SEC. 1.481-6 Election to Return to Former Method of Accounting.— * * * ❖ * (b) Except as provided in paragraph (e) of this section, a taxpayer who for any taxable j'ear beginning after December 31, 1953, and ending after August 16, 1954, but before September 2, 1958, computed Ms taxable income under a method of accounting different from the method used for the immediately preceding taxable year may elect to recompute bis taxable income, beginning with the taxable year for which such method was first used, under the method used for such preceding taxable year. (c) The election referred to in paragraph (b) of this section shall be made in the following manner: (1) On or before March 2, 1959, the taxpayer shall file with the district director with whom he filed his income tax return for the taxable year of the change a statement to the effect that he elects to recompute his taxable income, beginning with the first taxable year for which he computed his taxable income under a method of accounting different from the preceding taxable year, under the method used for such preceding taxable year. The statement shall indicate the first taxable year for which taxable income was computed under a different method of accounting ; and (2) On or before June 1, 1959, the taxpayer shall file amended income tax returns for all taxable years affected by the election with a statement attached thereto showing the recomputation of taxable income for such taxable years under the method of accounting which be used in computing taxable income for the taxable year immediately preceding the taxable year of the change. The taxpayer shall also compute the amount of deficiency or overassessment in tax resulting from such recomputation of taxable income.